"The bias remains on upside, but market may remain volatile in the short term due to subdued expectations from second-quarter earnings," said Sudip Bandyopadhyay, managing director at Destimoney Securities Pvt Ltd.

Bandyopadhyay said a rate cut is overdue as the inflation is expected to remain high.

India's BSE index

fell 0.69 percent, or 129.57 points, to 18,675.18 on Friday. The index, also known as the Sensex, fell 1.39 percent for the week.

The 50-share NSE index fell 0.56 percent, or 32 points, to 5,676.05 points and lost 1.23 percent for the week.

Stocks were not impressed by the modest improvement in India's industrial output for August, while inflation slowed, improving the case for a cut in interest rates that both businessmen and politicians have been pleading for.

Shares in Infosys Ltd

, India's second-ranked software services provider, fell 5.65 percent after it disappointed investors with weaker-than-expected margins and took a conservative view on its full-year earnings, sending its shares down the most in six months.

Infosys disappointing outlook also sapped confidence in some of the other IT stocks such as Wipro

and Tech Mahindra

. Wipro ended down 1.7 percent while Tech Mahindra fell 1.8 percent.

Financial stocks such as ICICI Bank also fell on fears of high inflation data on Monday. ICICI ended down 1.25 percent.

Delhi based property developer, Unitech

shares

fell 3.3 percent on profit-taking after Thursday's 17.2 percent gain, even as Citigroup upgraded the stock to 'buy' from 'neutral' and raised its target price to 38 rupees from 27 rupees.

Citigroup upgraded Unitech after the company dissolved a telecom joint venture with partner Telenor

, reaching a settlement on their longstanding dispute.

Kitchen appliances maker, TTK Prestige

fell 10.1 percent after its second-quarter net profit fell 10.17 percent to 302.8 million rupees from 337.1 million rupees.

However, among gainers, Jet Airways

rose 2.6 percent, while SpiceJet

ended up 0.14 percent after Bank of America-Merrill Lynch reiterated its 'buy' ratings on Jet Airways and SpiceJet.

Indian airlines in the near-term will benefit from a stronger rupee

, the temporary shutdown of Kingfisher

, capacity discipline, and improvements in utilisation and yield.

Maruti Suzuki

shares gained 0.2 percent after Deutsche Bank upgraded it to "buy" from "hold" and raised its target price to 1,600 rupees from 1,100 rupees. The bank sees earlier concerns on high levels of inflation, interest rates and widening of the gasoline-diesel price difference easing.